🌱 Why is due diligence alone not enough?
Despite the enactment of the EU’s Regulation on Deforestation-free Products (EUDR) and the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), there is a real risk that the EU could “merely becom[e] a niche market, while tropical forest loss for the most part [c]ould continue unabated”.[i] In line with this, Trase warns that companies “should not treat traceability as a silver bullet”, but that they “must think bigger to tackle deforestation”.[ii] This also means that “additional measures are needed” to make sure that the due diligence obligations under the EUDR or the CSDDD “translat[e] into actual reductions in deforestation on the ground”.[iii]
🌱 What loopholes are there?
A key issue, according to Trase, is that “while commodities linked to deforestation may be removed from the EU’s supply chain”, they may still be “sent to countries without these environmental regulations or consumed domestically”. If this is the case, there is “little benefit” to conducting the due diligence and more broadly, to having the EUDR or the CSDDD in place. As a real-life example, it is already known that “Brazil’s exporters […] sell soy to Denmark and Norway that is four-times less exposed to deforestation than soy sent to China or used domestically”.[iv]
🌱 How can companies tackle the issues?
It is possible for companies to help to tackle these issues by going beyond mere due diligence and building “meaningful partnerships with producer[s]”.[v] While companies “cannot just rely on traceability as a solution”, they can “act at multiple levels, not just on farms but across whole landscapes” through “multi-stakeholder efforts” to have a meaningful impact.[vi]
🌱 What potential solutions are there?
Using different tools and “policy instruments such as agricultural cooperation, development aid and incentives for the promotion of sustainable value chains – including those around the bioeconomy or novel products that spur local economic development while keeping forests standing” is one potential avenue that companies can take. On a more practical level, companies could also “engage more strategically to support activities such as sustainable land uses by smallholders, SMEs and indigenous peoples that can hedge against deforestation, but which often fail due to lack of economic or technical support”.[vii]
This post has been adapted from a newsletter written by Christine Nikander and Heidrun Kordholste-Nikander. The newsletter titled “How can businesses protect forests and their biodiversity?” was originally published in “The Just Transition Newsletter” by Palsa & Pulk.
[i] Trase: How to ensure due diligence policies actually tackle deforestation. https://trase.earth/insights/how-to-ensure-due-diligence-policies-actually-tackle-deforestation (21.08.2024)
[ii] Trase: Traceability is not a silver bullet for reducing deforestation. https://trase.earth/insights/traceability-is-not-a-silver-bullet-for-reducing-deforestation (21.08.2024)
[iii] Trase: How to ensure due diligence policies actually tackle deforestation. https://trase.earth/insights/how-to-ensure-due-diligence-policies-actually-tackle-deforestation (21.08.2024)
[iv] Trase: How to ensure due diligence policies actually tackle deforestation. https://trase.earth/insights/how-to-ensure-due-diligence-policies-actually-tackle-deforestation (21.08.2024)
[v] Trase: How to ensure due diligence policies actually tackle deforestation. https://trase.earth/insights/how-to-ensure-due-diligence-policies-actually-tackle-deforestation (21.08.2024)
[vi] Trase: Traceability is not a silver bullet for reducing deforestation. https://trase.earth/insights/traceability-is-not-a-silver-bullet-for-reducing-deforestation (21.08.2024)
[vii] Trase: How to ensure due diligence policies actually tackle deforestation. https://trase.earth/insights/how-to-ensure-due-diligence-policies-actually-tackle-deforestation (21.08.2024)